Clearing the Confusion Around TPS, TAA and TPP
What do TPA, TAA and TPP stand for, and are they good or bad for forgers? Let’s start with the basics. If you’re a forger, the more things you sell to your customers, whether they use them domestically or overseas, the better, right? Well, as with most things involving politics, it’s a little complicated.
Since the days of Adam Smith and David Ricardo, most economists have adopted the idea that nations should trade freely to benefit from the concept of comparative advantage – selling those goods they produced best or cheapest and using the proceeds to buy goods produced better or cheaper by other nations. In economic terms, that makes perfect sense.
What if a nation makes things that are good but not as cheap or cheap but not as good as another nation? And what if a lot of people are employed making those not-as-cheap or not-as-good items? If Smith’s and Ricardo’s theories are applied, there are winners and losers. Consumers may win by getting better or cheaper goods, but some workers may lose their jobs as a result.
So, nations have developed a complicated (and sometimes convoluted) system of tariff and non-tariff barriers to certain kinds of trade, along with trade remedies like anti-dumping and countervailing duty laws designed to promote “free and fair trade,” which of course can be defined to suit most any set of circumstances. And there’s a World Trade Organization to administer them all. Every country, including the U.S., has its own trade laws to protect its domestic industries.
Deep in this swamp is where we find TPA, TAA and TPP.
TPA stands for Trade Promotion Authority, and it is essentially legislation that gives the President the authority to negotiate trade agreements with other nations and gives Congress the authority to approve or disapprove those agreements once they are finalized. As with other treaties negotiated with other countries, however, under TPA Congress may only approve or disapprove the final deal – they may not amend it.
Presidents of both parties have been granted this authority periodically since 1974, but it was allowed to expire in 1994. It was renewed in 2002, but it lapsed again in 2007. In 2012, President Obama asked Congress for TPA authority in order to complete several pending trade negotiations, known as Free Trade Agreements (FTAs). Since 2007, however, many in Congress have become concerned that previous TPAs granted too much authority to the President and not enough to Congress. So, the legislation gives Congress more power to participate in the discussions leading to any trade agreement this time around, even though they still would have to vote “yes” or “no” once the agreement was finalized and presented to them for approval.
One of the ongoing negotiations is the Trans-Pacific Partnership (TPP), which would create a free trade agreement among the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. If completed, it would lower tariffs and remove other trade barriers for goods traded between any of the partners, stimulating exports and imports among all the parties to the agreement. Just as with most such agreements, there are supporters and there are opponents.
But remember our “what-if” questions earlier. Some argue that the TPP will harm American workers and should be defeated, although supporters of the TPP say there is no evidence to support that claim. That’s where Trade Adjustment Assistance (TAA) comes into play.
TAA is legislation designed to help American workers that may be affected by any new trade agreement. It would appropriate money for retraining and other assistance for workers who lose their jobs due to TPP. This type of legislation has been standard practice for most of the recent FTAs.
The current state of play on all this is as follows. Both the House and Senate passed versions of TPA (as of June 18). The Senate is now expected to vote on the House-passed bill the week of June 23 and send it to the President. TAA in some form will likely follow, and the TPP negotiations will continue. If the TPP negotiations conclude satisfactorily for all countries involved, then the President will send the TPP agreement to Congress for approval.
Some U.S. forgers already export directly to markets around the world and would benefit from lower tariffs and other barriers in those sectors. In addition, many customers of U.S. forgers are exporters, so increased exports of their products means more forgings made in the U.S. And even if the increased exports don’t contain forgings (such as agricultural products), the better those sectors do, the more they need products that contain forgings here in the U.S.
As always, there are two sides to this debate, and no doubt there are forgers on both. That’s why Congress is working to ensure the revised TPA with congressional oversight, trade enforcement laws and TAA are available to help offset any negative effects to workers that may arise from trade agreements such as the TPP.